Facebook’s Instagram Buy Boosts Mobile Strength

Facebook has purchased Instagram for $1 billion, reeling in an increasingly popular photo-sharing app as well one of the bigger social networks. Even though Instagram just released its Android version on April 3, it had 27 million users in March.

Instagram’s iPhone-only growth has been staggering. According to the company, it had 15 million users in December 2011.

The purchase gives Facebook more ownership over the photo-sharing space, whether online or mobile. As Facebook has recently begun distributing ads via mobile, Instagram’s audience and technology should facilitate Facebook’s mobile monetization goals. As of now, the Menlo Park, CA-based digital giant doesn’t sell mobile ads separately. But for a company that embraces constant iteration as part of its culture, how mobile ads are sold may be ripe for change – especially with Facebook’s anticipated IPO now only weeks away.

“This is all about mobile; it’s all about showing shareholders [that Facebook no longer has] a mobile weakness,” Ian Schafer, CEO of Deep Focus, told ClickZ. “There’s no reason why ads wouldn’t play well in the Instagram interface…[The purchase] was only a matter of time, especially because Facebook will be flush with cash.”

Schafer said Instagram would give Facebook a stronger hold on young demographics. “There’s just a tremendous utility rate among the people that matter,” he explained.

While Instagram hasn’t sold ads, brands have cottoned to its platform to engage with consumers for free.

Facebook CEO Mark Zuckerberg announced the purchase on his Facebook page, stating that the Instagram brand would be kept intact. “Millions of people around the world love the Instagram app and the brand associated with it,” he wrote, “and our goal is to help spread this app and brand to even more people.”

Kate Kaye contributed.

Related reading

GroupM predicts that global ad spend will top $547 billion next year, up from $524 billion this year. While television will still capture the biggest share of that 12-figure pie (41%), digital's share will grow from 31% to 33%.